The Foreign Investment Review Board (the FIRB) is a non-statutory body that guides the Australian Government on Foreign Investment Policy (the policy) and its management. The FIRB’s major role is to examine proposals made by foreign investors. It also recommends the Government, that whether the proposals made by the foreign investors could be accepted by the Government under the policy.
The FIRB conducts awareness program both in Australia and abroad about the policy. It provides guidance to the foreign investors, so that their proposals are in accordance to the policy.
Responsibility solely lies with the FIRB’s Treasurer (Treasurer) for the policy and for making decisions on proposals made by foreign investors.
Foreign Acquisition and Takeovers Act 1975
The Foreign Acquisitions and Takeovers Act, 1975 (the Act) and the Foreign Acquisitions and Takeovers Regulations, 1989 provide the legislative support to the policy.
The Act empowers the Treasurer to examine proposals made by foreign investors. However, he does not possess any power to approve the investment proposals. To the contrary, the Treasurer can prohibit or restrict a proposal made by a foreign investor which he considers to be against the national interest or can give a no objection certificate in order that the proposals are approved.
Owen Hodge Lawyers has extensive and enhanced experience in handling the FIRB applications.
Acquisition of Residential Real Estate
Residential properties other than commercial properties, including offices, factories, warehouses, and shops, and rural properties, including lands, which are used wholly and exclusively for carrying on a substantial business of primary production are known as residential real estate. Foreign investors can acquire residential real estate only after taking prior approval from the FIRB.
Foreign investors need to apply for approval of the following investment proposals:
if foreign investors are purchasing a residential real estate, including established or new residential property, vacant land and recreational farms;
if foreign investors are purchasing a rural land;
if foreign investors are purchasing a developed commercial real estate;
if foreign investors are purchasing a vacant commercial real estate for development;
if foreign investors are acquiring shares, business assets or dealing with an existing company for some other interest; and
if foreign investors are establishing a new business or working on a new project.
Certain acquisitions do not require notification or approval from the FIRB under the Act. On 16 August 2012, Chairman of the FIRB commented that FIRB will be updating its policy guidelines to clarify when investments by foreign Governments and their related entities need FIRB approval. The FIRB believed that it was a misinterpretation of its foreign investment policy by Etihad Airways, the United Arab Emirates state-owned airline in initially acquiring a 3.96% stake in Virgin Australia without obtaining FIRB approval. Etihad Airways ultimately obtained FIRB approval to acquire a 10% stake.
We at Owen Hodge Lawyers can guide you on whether your proposed acquisition is exempt or not under the Act.
Foreign investors need to send an application to the FIRB to receive an approval before they can purchase a residential real estate.
Each individual section of the application needs to be submitted as a separate file attachments to the Email. The formats for attachments should be in “Pdf” or in “Word” files. Separate attachments would include the following:
Covering explanatory letter;
Statutory notice under section 25, 26 and 26A of the Act; and
Other supporting documents such as company annual and financial reports.
Emails, which are larger than 10 megabytes are blocked automatically. Following are the remedies to avoid such situation:
Send an initial Email with the covering explanatory letter and statutory notice; and
Subsequent Email(s) with the additional attachments.
Process of Business Investment
There are a number of important considerations that an investor must take into account when deciding on how to enter the Australian market or when to establish a business in Australia. Foreign investors need to choose between, establishing a new company or registering as a foreign company or acquiring an existing company.
When establishing a new business, the investor has a variety of business structures to select with its own rules and regulation and tax obligations.
Owen Hodge Lawyers are accredited specialists and are experienced in successfully directing merger and acquisition transactions, joint ventures and strategic business combinations of all types.
One should make a business investment in Australia for the following reasons:
Business environment is economically and politically stable;
Business friendly regulatory system;
Availability of highly skilled and multilingual workforce;
Financial service sector is strong and sophisticated;
Property buying process is well established;
High capital returns in key investment areas; and
Regulated investment markets are transparent and of low risk.
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